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RV Loans with Billy and Sandra Hanson

1 comment December 24th, 2008

Billy and Sandra both love the great outdoors and both love to travel and this is their story about their purchase of a brand-new RV and the details of the RV financing they required.

They could never afford to buy an RV with cash like most Americans wishing to begin a new adventure in a motor home. They went to all of the RV lots and researched dozens of different RVs at different times. In the summertime, actually as soon as spring started, they can be found in the RV lots walking in the above the different recreational vehicles for sale. The dealerships had their own financing and they were tempted to bite the bullet and borrow the money.

This went on for two to three years before finally one day they broke down and bought an RV. They bought a Forest River 2300 and they loved every minute of it. However, there is a price to pay for such a luxury. The RV was bought brand-new for just under $70,000, and the total bill after extended warranties and all of the extras came to a whopping $80,000.

So as usual I have to pull out by RV loan calculator and do the math on this little excursion or should I say purchase. On our home page you will notice a handy little loan calculator which I use almost every day and our visitors use quite often. You can enter the principal amount of the loan, the interest rate, how many years in the term, and how many days between payments (four example bi-weekly meaning 14 days, monthly meaning 30 days, weekly meaning seven days – or whatever other number you wish to enter). This will give you the total amount of interest you are paying on your RV loan, the monthly payment you will have on the loan, and the total of the principal loan in the interest combined.

So for our example with Billy and Sandra they had an $80,000 principal amount so let us enter that into our calculator. They had an interest rate with their financing from the RV dealer of 7%, and they plan to make payments once a month – so let us enter that into the calculator is well. Furthermore, the term of their RV loan with the dealer was for 20 years. So after entering all this information we find that Billy and Sandra are actually paying over $136,000 for their 23-foot RV. I have put the complete numbers below.

Total Amount to be payed: $136230.35
Total amount of interest $56230.35
Payments: $559.85

As you can plainly see they are paying as much interest as they paid for the principal amount of the RV, meaning that in the 20 years of their RV loan they are actually paying for the RV twice. This is the reality of banking, lending, and RV financing. This may sound very discouraging but the same rules apply for home mortgages, and at least you have the fun and the pride that comes with owning a motor-home. You may think that Billy and Sandra may regret their impulsive purchase but they don’t. On the contrary, they told me they would rather sell their house to get rid of their mortgage than sell their precious RV.

When they are cruising down the road in the summer, and finding a peaceful spot on the edge of a river or lake, they don’t think about the extra $560 they pay a month (actually close to $700 a month after insurance and expenses). They think about life, freedom and the peace and quite they get being outside the city.

Motorcycle Loans Calculation

1 comment December 17th, 2008

2009 is approaching quickly and because of the costs of only a vehicle have become so expensive and the cost of fuel has been climbing up over the last months motorcycles are become a great option. However, you need to be financed for your motorcycle purchase if you don’t already have the cash.

One of the big problems with finding motorcycle loans online is that you just don’t know who to believe and which web sites you can trust. Because I have a web site providing information on motorcycle loans I’m aware of which web sites are trustworthy and which ones are not.

The first thing you need to ask yourself is what are the interest rates charged by lenders who provide loans for motorcycle purchasing. The interest rates do vary of course because of the prime rate, but motorcycle loans generally cost more when it comes to percentage points. Below is the current and standard interest rates charged for motorcycle loans at the time of this writing.

As you can see the interest rates are quite a bit higher than if you were to buy a car, and these rates come in two different categories; the 24-47 month term and the 47-72 month term

Current Interest Rates As Of Today’s Date

A lot will depend on how long the term of your motorcycle loan is, whether it is new or whether the motorcycle is used, and whether or not you buy your bike at a dealer (or non-dealer).

if you look at your interest charges on a motorcycle loan for a 72 month term and purchased from a non-dealer you will be paying 11% interest over the course of the year. So let us do some math now.

Let’s follow the following scenario shall we; you want to buy a brand-new Honda Gold Wing for the “low price” of $40,000 USD.

We’ll assume you want to take out a loan for a six-year term, and you want to pay biweekly (every two weeks). Using the table from above, and assuming that you are buying the motorcycle from someone who is not a dealer, you will be paying the highest interest rate possible for motorcycle loan – 11%.

The total amount you’ll have to pay for your brand-new Honda Gold Wing motorcycle is $53,284.52. You will have paid $13,284.52 in just interest. As you can see below your monthly payments will be $340.63. Of course you’ll be paying biweekly so every two weeks you will have to pay $170.32.

Total Amount to be payed: $53,284.52
Total amount of interest $13,284.52
Payments: 340.63 per month

So you can see the obvious advantage of being able to buy your motorcycle for cash, but let’s not be too hard on ourselves here because most people can’t afford to buy $40,000 items with cash.

What Defines The Phrase “Personal Inflation Rate”

Add comment December 12th, 2008

Understanding what a personal inflation rate is is quite simple really. Banks, lenders, and brokers alike use your personal inflation rate as a guideline when considering your loans. Every single consumer and the borrower on this planet has their own unique personal inflation rate, and it is wise for you to understand what yours is and how it affects your chances of being approved for personal financing.

Your personal inflation rate is not the biggest trigger for whether or not you get approved. Your PIR is just another factor in the equation when it comes to your approvalability. Don’t think that your personal inflation rate is the biggest factor for the banks when you are trying to get a loan of any kind. Lenders just need to know how much money you need to spend each month on the specific items you have on the go. It is just the way for the banks to judge whether or not your expenses are going to grow a monthly basis and the future. They take into account your monthly payments and your financial responsibilities everywhere else except the loan you are presently applying for.

As per the normal, your future personal financial predicament or situation will be different if you consider all of the factors that come into play on a monthly, weekly, or yearly term. Loan officers and lenders want to have a simplified idea of where you are going down the road. They can see that if you have a dozen children that you will be expected to either earn more or spend less. Of course if you have 12 children you will be certainly spending more money in the future and this is what we call a personal inflation rate – the guesstimate of all of the new costs you will incurred or going forward as your children in this case will cost you. I believe the numbers that I have heard in the past for what it cost to raise a child from birth to 18 years of age is approximately $300,000. I remember this number as being $150,000 (well at least that is what my wife remembers it to be) but of course times have changed and the spoiled little brats are costing as a hell of a lot more money (just kidding).

As you can well imagine the personal inflation rate for somebody who is older and retired and as I have children is much less. Like I have mentioned on other places on the Web, this does not mean a person with a personal ablation rate that is low is guaranteed to get approval. So many other factors weigh into the banks calculations. Your credit score is still number one factor in your past history of making payments. If you have a very high FICO score the banks may not even consider your personal inflation rate, so you don’t have to worry about. If however, you have a weak credit rating in the range of 600-620 FICO odds are the banks will look very closely at your personal inflation rate. If your credit rating is that bad your odds of getting approved are almost nil and void. I hate to be a negative Nellie but “thems the facts”.

So don’t be stressing about your personal inflation rate when you go to apply for a loan online or at your local bank. Just keep this in the back of your mind when you tell the bank you have seven dependents with hungry mouths to feed.

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